Managing Essentials

International Happiness Happiness at work? The case for loyalty

A for this field new term is slowly entering the world of work: Happiness. More and more publications refer to the happiness individuals should experience doing their job. This is new since happiness was until recently an emotional state primarily connected to private events. The newborn baby, the first love, an evening at the beach - these are the moments of happiness. In our material world some extensions to goods have become a tradition. A new car, gadget or lottery win - these may be causes of happiness. But most readers will agree that predominantly the social events in private life bring around more of this joyful state than the nicest to have material goods. This goes well together with life evaluations in memoirs. Of course, the new and more comfortable home finds a proud or relieved mention, but its not more than the shell in which the emotionally really important events unfold. Work has up to now rarely been associated with happiness and was never implicitly demanded. As long as companies were modeled resembling military structures 'morale' was the term describing best the attitude individuals were expected to bring around for work. The recognition that management must not only be rational but also social gave rise to the term 'job satisfaction' which dominates the scientific studies from the early 50ties until today. Satisfaction is a relativistic term indicating that there are most probably plusses and minuses the individual will weight. There is some hesitation in the term and critical distance. That may be one reason for the new prominence of happiness at the work place. In the present time of fast companies operating in a, as some perceive, post-industrial and post-materialistic world the sober weighting of facets has no real place. Should talent not move as fast as the world around it and therefore be able to be always at the place which makes happy? Isnt the ideal work-life balance reached in the moment when work merges with life creating individual happiness in a new unifying entity, or as the Germans would say more fittingly Gestalt? Historically work and happiness have always been antagonists. Etymologic dictionaries in most languages link work to the hard side of life, the tiring and exhausting activities one has necessarily to engage in to win the daily bread. In their depressing reality people developed a clear picture where happiness would be found and how it should look. This place was called paradise, a place without the need to work. The phenomenon of procrastination, discussed around the globe wherever work can be found, shows that this antagonism exists also today not just as a semantic one, but that work regularly contains elements individuals not really like to do. Procrastination also expresses a progressive problem shift in parts of the world indicating that there is at least some choice. Many workers at the workbenches in the developing world and also quite some in the West still work under strict regimes and can only hope for some job enrichment and job enlargement making some procrastination possible. Finally, contemporary trend-setting fast companies with slogans like better done than perfect give a wrong image of the true demands and values in working life. The slogan was most likely not found in Michelangelos workshop and certainly will give you second thoughts when you encounter it in your car repair shop or at the wall over your bed in an emergency room. The inevitable disliked elements of work and the need to come at least close to perfection will always make working a stressful experience. As in the gym some stress increases fitness, an overload for

Managing Essentials
International
sure does not. However visits to the gym are voluntary activities while work is the defining element of a job. The interests of companies and employees are basically functional ones. Companies have to focus on products and technologies in their fight for survival in competitive markets. The jobs offered are defined qualitatively and quantitatively by functional necessities. Individuals, on the other hand functionalize companies to make their living and hopefully a career. This functionalism is reflected in the concept of corporate citizenship which centers on the contractual relations between company and individual. Obviously, the concept is on first sight as cold hearted as it is stable. The citizenship gets to life by the work it contractually defines. The actual work brings around the bosses, colleagues and activities which hopefully make it a motivating experience. However already the contract often expresses compromises and it has a context. Obviously a contract with a company having a record of laying off thousands of employees occasionally will be viewed differently than a company without such a history. Not by accident the claim for happiness is most pronounced in the USA, a country where job cuts in the 5 digit area may be welcomed at the stock exchanges by a rise in share price. Of course, hire and fire is a prejudice not characterizing many of the companies in the USA correctly, but there is a tendency to value shareholders higher than jobholders. Peter Cappeli and colleagues exemplify this difference in their book about the India Way, which is based on interviews with an impressing sample of top executives from leading Indian companies. But the notion to take social responsibility at least as serious as shareholders interests can be found in many countries. Germanys biggest car producer Volkswagen or Brazils oil-giant Petrobras are just two examples pointing to the geographical and industrial spread of this idea. The majority of their employees will not be happy, but they can rest assured that only in an extraordinary situation their job is at stake. As in many other, especially Asian, companies their workforces are close to famous for their loyalty. Not only as an emotional state loyalty comes close to the opposite of happiness. Happiness is often a superficial emotion, hard to hold up over a longer period of time. It depends on events and is easily depleted or even reversed when things do not work out. Loyalty is a deep rooted emotion, which has to be earned over a long time but, if gained, also will carry very far. It does not depend strongly on the current state of affairs but with its long-term perspective takes into account that there are always good and bad times over long stretches of time. Last not least loyalty can be created by corporate policies and does not depend on job characteristics. A loyal workforce will most likely always outperform a happy one over time. Firstly, every company has its jobs which just have no big potential to really gratify at all or in a way unique for the company. Nevertheless these jobs are important and have to be done with the same care and precision as the others. Such limitations are evident for many lower skilled jobs. But also specialists like traders in the financial markets and programmers are often hard to retain because their link to the company they work for is primarily a technological one. Secondly, crisis is inevitable as a natural companion of growth or out of market forces and the best leave the sinking ship first. This phenomenon proves often fatal since the already bruised company loses those individuals first who could put it on track again. Finally, loyalty can be managed from the top and help to overcome problems at the work place. Every bigger company has its fair share of not-so-good bosses, colleagues and work situations.

Managing Essentials
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In these situations employees look to the policies advocated at the top when they consider to stay and make a change or just to leave. There are no roses without thorns. The focus on loyalty can cause for a company the problem of internal inflexibility. The low turnover is a ground for inbreeding and possibly leads to the infamous it has always been done this way here. Hard to transform operational rigidities might be accompanied and even supported by an informal structure characterized by old boys networks and other cliques. It is the prime task of management to keep up dynamics, innovation and flexibility by job rotation, taking in expertise and sending its employees out into the universe of congresses, meetings and special events where experts of the industry meet to see how competing companies evolve and work. That a management more strongly focused on loyalty may, however, even be more flexible was demonstrated in the recent economic crisis. Many companies in the USA radically downsized and fired, German companies in comparable industries tried to hold their staff by agreeing on wage cuts for the often many months of short labor. They were assisted in these attempts by a state governed labor administration. While in US-American companies the often stressed relations between management and employees or their representations became evident, staff of German companies from the top floor to the workbench had the feeling to sit in one boat. Consequently, in the recovery German companies and the German economy as a whole took a lead since everybody was prepared and structures had been put to a rest but were not broken. Loyalty has been downplayed as a fallacy especially by former General Electric (GE) Chairman and USA business guru Jack Welch who pictured it as a soft pillow on which performance becomes secondary especially for, in his words, marginal employees. Things look, however, different for companies which have - due to good management no marginal employees to be fired but a human capital to be developed. In addition and practically, many companies are well advised to do so because they cannot hope to fill gaps in their staff very fast. GE was one of the most attractive employers then. The current stars on the USA employment market have revenues of US$ 1.2 million per employee. Most companies will always dream of such a number and the possibilities connected to it when it comes to salaries and work arrangements. How hard lack of loyalty can impair operations is felt by many companies in the rapidly expanding economy of China where job hopping has become a pastime. Louisa Wong recently discussed the need to reassess retention strategies on the background of turnover rates exceeding 20 percent. For management positions the rate is even more alarming with about 60 percent of the individuals staying only three years or less. She advises not to look at the length of tenure but on what has been achieved in it. That is certainly right but not only the decisive departments of research and innovation need continuity and stability over years. In general, those leaving will be the more ambitious ones. Finally, high turnover is costly since new hires regularly lead to an upward shift in salaries and cannot take over the tutoring and mentoring roles for a long time. Of course, best is to have both, happy and loyal people at the workplaces. But the former is harder to achieve than the latter, sometimes it will be close to impossible. Especially upper management, far away from the workbenches and offices, should care to create a policy and culture nurturing loyalty.

Managing Essentials
International
Peter Cappelli, Harbir Singh, Jitendra Sing & Michael Useem (book website) www.managing-essentials.com/2j3 The Loyalty Fallacy (Jack and Suzy Welch) www.managing-essentials.com/2j4 Renewing Paradigms on Employee Loyalty and Turnover Rates (Louisa Wong) www.managing-essentials.com/2j5